Lufthansa Reduces Planned Capacity Growth

16th Aug 2001

Withdrawal from unprofitable intercontinental routes
Lufthansa is adapting its long-haul network to counteract the sharp downturn in the world economy and its impact on intercontinental air traffic. The airline is to reduce its planned capacity growth and focus more sharply on profitable routes.
Lufthansa is adapting its long-haul network to counteract the sharp downturn in the world economy and its impact on intercontinental air traffic. The airline is to reduce its planned capacity growth and focus more sharply on profitable routes. The reduction is equivalent to the capacity of two Boeing 747-200 aircraft. At the start of the 2001/2002 winter timetable, Lufthansa will cease operating its traditional services to Rio de
Janeiro. Connections to Bogota and Tashkent will be discontinued in early 2002. Simultaneously, Lufthansa will be deploying smaller aircraft on North Atlantic routes ex Frankfurt to Atlanta, Detroit and Vancouver. Two flights weekly are to be scrapped on the Frankfurt-New York route.
The weakening global economy, originating in America, has had a significant impact on the airline business. Demand in intercontinental traffic is well below the previous year`s level. The airlines, including Lufthansa, are additionally burdened by rising costs for fuel, maintenance services and personnel. The entire industry is coming under increasing pressure to ponder capacity adjustments.

In the first six months of the year, Lufthansa increased its share of the premium market segment on all relevant connections. “On prime North Atlantic routes, we also made clear gains. But there are markets, whose structure principally generates tourist demand, like Rio. High capacity utilisation does not in itself suffice to serve those routes profitably. For that, a balanced mix of First, Business and Economy-Class passengers is essential,” said Ralf Teckentrup, Lufthansa Executive Vice President Network Management and Marketing.

In the next few years, Lufthansa is planning for moderate growth in intercontinental air traffic. “We cannot afford excess capacities,” emphasised Teckentrup. “Market-driven growth has always been Lufthansa`s strategy and will remain so in the future. That has sustained our leading role in the international airline industry.” The originally planned capacity growth of around seven per cent annually is to be adjusted down to a yearly three per cent. Should the market develop positively again, Lufthansa is in a position to adapt its planning accordingly at any time.